Is there a statute of limitations on collecting old debts?

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In a Nutshell

If you don’t pay back your debts, debt collectors have legal remedies available, which may include suing you. Each state can set limits on the amount of time that debt collectors have to take legal action. This limit is often called the statute of limitations on debt. It doesn’t apply to certain kinds of debts, but on those that it does apply to, you could accidentally restart the clock by taking certain actions.
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The statute of limitations, which varies by state, can protect you from lawsuits brought to settle old debts.

When it comes to your debts, what happens if you don’t pay back the money you owe? Creditors may report delinquent debt to the three major consumer credit bureaus — Equifax, Experian and TransUnion — which can show up on your credit reports and damage your credit. Your debts may also be sent to collections, where debt collectors may also file a lawsuit and get a judgment against you.

The consequences can be dire, but many unpaid debts won’t haunt you forever thanks to the statute of limitations on debt, as well as limits on how long negative information stays on your credit reports.

What is the statute of limitations on debt?

The statute of limitations on debt varies by state. It applies to certain types of debt and sets a limit for how long debt collectors have to file a lawsuit to collect on a debt. If the statute of limitations expires, debt collectors can no longer sue you to collect the debt. Their case is said to be “time-barred.”

This doesn’t mean collectors can’t still contact you and ask you to pay. Depending on the state, they may still be able to call or write letters in an attempt to collect. But if they threaten to file a lawsuit after the statute of limitations has expired, this threat could be a violation of the Fair Debt Collection Practices Act, or FDCPA. If you ask the debt collector whether the statute of limitations has expired, they don’t have to answer — but if they do answer, they can’t lie.

Heads up: Many types of debt have a statute of limitations on when the debt collector can take legal action to collect. But if you owe on federal student loans, creditors retain the right to pursue legal action indefinitely.

Read more: 4 things debt collectors can’t do

How does the statute of limitations on debt work?

The time clock for the statute of limitations may start running on the date of your first missed payment — so ask your creditor when that payment was if you aren’t sure.

In some states, the clock restarts if you make a new payment. For example, if you make a payment — even a partial payment — on a debt that’s 12 years old, it could restart the clock on the statute of limitations and give debt collectors time to sue to collect what you owe.

If the statute of limitations is expired but the debt collector keeps contacting you anyway, you can send the collector a letter to request that they stop communication with you.

What is the statute of limitations in my state?

Each state sets its own statute of limitations for debt collection. For example, Maine has a six-year statute of limitations — a debt collector can’t start a collection action more than six years after the date of your last activity on a debt. If six years and a day pass since your last activity and your debt collector hasn’t brought an action against you to collect on your outstanding credit card debt, that debt collector can no longer sue you to repay what you owe.

Most states have a statute of limitations in the range of three years to six years, though some give debt collectors as long as 10 years to take you to court.

For more information about your state’s statute of limitations for unwritten or written contracts, you can contact your state attorney general’s office or reach out to legal aid.

Is the statute of limitations different from the credit-reporting time period?

If the statute of limitations passes and claims are time-barred, it doesn’t mean that old debt is out of your life for good. A reminder of the unpaid balance might stay on your credit reports for even longer than the time that debt collectors have to sue.

That’s because the credit-reporting time period is entirely separate from the statute of limitations. Derogatory marks — details about late payments and debt you never repaid — typically stay on your credit reports for seven years.

So if you live in a state with a three-year statute of limitations on debt, your defaulted debt could hurt your credit for another four years after your debt collectors have lost the ability to take legal action against you.

What happens if you get sued after the statute of limitations expires?

If your debt is so old that the statute of limitations prevents debt collectors from suing, don’t assume you’re free from legal risk. Sometimes collectors may try to pursue a legal claim, even if it’s technically time-barred.

Debt collectors may try disputing the date of when the clock started running or may argue that the time limit imposed by the statute of limitations doesn’t apply.

If this happens, you’ll need to go to court and ask the judge to dismiss the case because the debt is time-barred per your state’s statute of limitations. Consider reaching out to an attorney to help you with this process. If you don’t show up to make your argument, there’s a chance the court will enter a judgment against you and order you to pay.

If the collector wins a judgment, they could then get help collecting in the form of a court order to garnish your wages, meaning money would be withdrawn directly from your paycheck until the debt has been repaid.

Collectors who’ve sued you after the statute of limitations has expired may be in violation of the Fair Debt Collection Practices Act and can face consequences if you decide to file a complaint with the Federal Trade Commission or file your own lawsuit.

Paying your debts after the statute of limitations expires

If a debt collector can no longer try to collect because the statute of limitations on the debt has passed, you technically still owe the money — the debt collector just can’t sue to enforce the debt.

You could decide to repay all you owe anyway. You could even negotiate with the collector to accept a smaller payment than the total owed to settle the debt — but make sure to get the agreement in writing before you make a payment.

You could also decide to pay nothing at all. The debt collector may still try to contact you to request that you pay, but you can submit a written request asking them to stop communications. But don’t treat this option lightly — your credit will be negatively affected and it could be harder and more expensive to get credit or other services — and there may be other consequences.

Bottom line

If your debt gets too old and the statute of limitations expires, debt collectors may not be able to sue you to enforce the debt. Find out what the statute of limitations is in your state to determine if a claim against you is time-barred. If it is, be careful about making any payments until you have a plan in place to address the debt. Even partial payments on a debt in collections could restart the clock, leaving you facing the risk of being sued by a collector for what you owe.

And keep in mind that the statute of limitations on debt collectors going after you for debt is different than the amount of time a derogatory mark can stay on your credit reports.

Worried about paying debt because of COVID-19?

The economic effects of the coronavirus pandemic have made it difficult for many Americans to pay off debt.

But regulations in place under the FDCPA mean debt collectors still have to follow standard collection practices — even during a pandemic. And there are other relief measures that may be available from the federal, state or local government, your mortgage or auto lender, credit card issuers or your student loan lender.

About the author: Christy Rakoczy Bieber is a full-time personal finance and legal writer. She is a graduate of UCLA School of Law and the University of Rochester. Christy was previously a college teacher with experience writing textbo… Read more.